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V 


The  War  Traders : 
An  Exposure 

By 
George  Herbert  Ferris 


^''-w''Tfmm/y 


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•  --■>.■' 


THE  WAR   TRADERS: 


AN    EXPOSURE 


BY 


GEORGE  HERBERT  FERRIS 


I 

^ 


NATIONAL  PEACE  COUNCIL. 
167,  St.   Stephen's  House.   Westminster,   S.W. 

Telephone  6059  Victoria. 
PRICE    TWOPENCE. 


2 


'•^rya/   B.J^^y\  . 


By  the  Same  Author: 

A  SHORT  HISTORY  OF  WAR  AND  PEACE  (Honw. 
University  Library:  Williams  &  Norgatb),   Is.     1911. 

OUR   FOREIGN    POLICY    (Melrose),    2s.    6d.  net.      1912. 

GERMANY   AND   THE  GERMAN  EMPEROR  (Mel- 
rose), 12s.  6d.  net.     1912. 


HX) 


THE  WAR  TRADERS: 

AN   EXPOSURE 


PREFACE. 

The  substance  of  the  following  paper  was  read  at  the 
National  Peace  Congress,  Leeds,  on  June  11,  1913.  On 
the  previous  evening,  in  the  House  of  Commons,  in  answer 
to  a  request  that  he  would  print  lists  of  the  larger  Govern- 
ment contractors,  Mr.  Asquith  had  declined  to  satisfy  what 
he  called  "  a  roving  curiosity."  It  is  so  many  years  since 
my  "  curiosity  "  began  to  "  rove  "  in  this  field  that  I  should 
hardly  have  been  drawn  back  to  the  subject  at  this  time 
but  for  two  considerations. 

The  first  arose  from  Dr.  Liebknecht's  revelations  in  the 
Reichstag,  and  the  manner  of  their  reception  in  this  country. 
It  seemed  necessary  to  show  that  Germany  has  no  monopoly 
of  the  evil  here  dealt  with,  and  to  state  more  emphatically 
than  heretofore  the  chief  corollary  to  the  proposition  so  well 
argued  by  Mr.  Norman  Angell,  that  war  does  not,  and  as 
between  great  modern  nations  cannot,  pay.  War  does  not 
pay  the  nations.  But  war  panics  and  preparations  do,  all 
the  time  and  on  an  enormous  scale,  pay  powerful  groups 
of  men  in  each  nation  ;  and  it  may  be  doubted  whether  any 
real  peace  will  be  achieved  till  this  association  of  political 
power  and  the  private  trade  in  arms  is  broken. 

Secondly,  the  Marconi  trials  and  inquiry  have  set  up 
new  currents  of  critical  thought.  Men  who  differ  in  their 
view  of  this  melancholy  episode  may  yet  agree  in  hoping 
that  it  may  result  in  a  generally  higher  standard  of  public 
duty.  But  if  that  end  is  to  be  attained,  there  will  have  to 
be  a  much  wider  inquiry  into  the  connection  between 
Parliamentary  or  administratrve  power  and  private  profit- 
making  than  has  yet  been  attempted. 

Three  motives  meet,  then,  in  the  following  pages — 
international  peace,  national  economy,  and  purity  of  public 
life. 

I  have  sought  to  state  the  case  in  precise  terms,  and  to 
exclude  any  statement  as  to    fact    that    is    not    verifiable. 


221680 


Thanks  to  the  reticence  of  siiccessive  Govemmeuts  and  the 
companies  concerned,  parts  of  the  subject  are  still  "  wropt 
in  myst'ry."  But  indiscretions  will  occur,  even  in  the  best 
regulated  businesses ;  and  some  at  these  have  been 
particularly  enlightening.  For  the  rest,  I  am  indebted 
almost  exclusively  to  the  columns  of  the  Times  and  its 
Financial  Supplements,  the  Economist,  and  other  financial 
journals,  the  "Stock  Exchange  Year  book,"  the  "Directory 
of  Directors,"  "  Who's  Who,"  "  Who's  Who  in  Business," 
and  other  financial  reference  books,  the  varioue  Army  and 
Navy  Annuals,  certain  company  reports  and  balance-sheets, 
the  Parliamentary  debates,  and  several  former  panaphlets 
and  articles  of  my  own. 

Two  series  of  articles  which  have  appeared  since  this 
p^per  was  undertaken  may  be  here  mentioned,  the  one  by 
"  P.W.W."  in  the  Daily  News,  where  some  points  of  the 
Mulliner  episode  have  been  more  fu41y  dealt  with,  and  the 
other  in  the  Labour  Leader,  by  Mr  J.  T.  Walton  Newbold, 
who  has  analysed  not  only  the  directorships,  but  the  lists 
of  shareholders  of  some  of  the  leading  companies.  The 
Investors'  Review  has  also  printed  some  of  the  share  lists. 
This  is  a  point  upon  which  I  have  not  entered  in  any  detail.. 

June,  1913. 


I.— PATRIOTISM  AND  PROFITS. 

If  tkere  is  one  convention  that  overrides  all  others  in 
Europe,  it  is  that  of  the  peculiar  sanctity  of  the  processes 
and  apparatus  of  "national  defence."  In  France  the  Army, 
in  England  the  Navy,  is  the  Ark  of  the  Covenant.  They 
represent  not  merely  the  prestige,  glory,  and  honour  of  the 
Fatherland,  but  the  very  possibility  of  its  existence.  With- 
out them  we  cannot  live.  They  are  our  bravest,  purest, 
chivalry.  The  uniform  and  the  flag  cover  tiiem  as  with  a 
holy  mantle.  Governments,  therefore,  cannot  make  too 
solemn  a  face,  citizens  cannot  make  sacrifices  too  large, 
v;hen  the  need  of  strengthening  this  power  of  slaughter  is 
declared  by  those  in  authority  over  us.  This  is  the  on];y 
Patriotism ;  the  man  who  dares  to  question  it  is  a  traitor 
to  his  country. 

We  of  the  Peace  Party  have  usually  been  content  to 
describe  this  conventional  Patriotism  as  a  superstition,  a 
slander  on  our  own  nature  and  that  of  our  fellow  men  in 
other  countries.  But  this  is  not  the  whole  truth.  Every 
superstition  is  based  upon  a  trade ;  and  this  is  no  exception 
to  the  rule.  I  propose  in  the  following  pages  to  attempt  a 
brief  scientific  analysis  of  the  trading  interests  (so  far  as 
they  are  visible  in  Great  Britain)  which  underlie  the 
patriotic  superstition  of  our  day. 

The  arsenals,  dockyards,  and  factories  belonging  to  the 
State  play  a  smaller  and  smaller  part  in  the  provision  of  the 
national  armament.  The  great  mass  of  this  material — five- 
sixths  of  the  new  naval  construction,  for  instance — is  pro- 
duced by  private  firms.  The  chief  armament  companies 
registered  in  this  country — those  having  a  capital  of  more 
than  a  million  sterling — are  seven  in  number : 

Capital. 
£ 

1.  Armstrong,    Whitworth,    &    Co 9.512.000 

2.  Vickers,    Ltd 8,588.000 

3.  Camraell,   Laird,    &   Co 4,075,000 

4.  Wm.    Beardmore    &    Co 3,703.000 

5.  John   Brown    &   Co 3.573.000 

6.  The   Nobel    Dynamite    Trust    3,285.000 

7.  Coventry.  Ordnance  Co 1,400,000 

These  figures  include  £2,000,000  just  added  to  the  capital 
of  Armstrong 'b,  and  £740,000  to  that  of  Vickers',  mainly 
for  extensions  and  foreign  branches.* 


•Details  of  these  sums  will  be  found  in  the  Econemitt  of  April  26,  1913. 


There  are  many  other  firms — I.  J.  Thomeycroft  and  Co., 
with  a  capital  of  £607,000;  J.  S.  White  and  Co.,  of  East 
Cowes,  who  are  building  six  ocean-going  destroyers  for  Chile  ; 
Whitehead  Torpedo  Works;  Scotts,  Ltd.,  of  Greenock;  the 
Birmingham  Small  /^rms  Co..  the  British  South  African 
Explosives  Co.,  the  Birmingiiam  Metal  and  Munitions  Co., 
Kynoch,  Ltd. ;  Curtis's  and  Harvey,  etc. ;  and,  of  course, 
firms  like  Harland  and  Wolff  and  Palmer's  do  much 
Admiralty  work,  while  the  Army  contractors  are  too 
numerous  to  mention.  Many  of  these  com.panies  do  civil 
as  well  as  military  and  naval  business.  It  is  impossible 
to  distinguish  between  the  capital  used  for  the  one  and  the 
other  purpose;  and  it  is,  therefore,  impossible  to  say  how 
much  pi'ivate  money  is  invested  in  this  country  in  the  trade 
of  war.  But  the  seven  chief  firms  alone  have  now  a  com- 
bined capital  of  about  £34,000,000  (less  some  little 
duplication  in  the  figures) ;  and  it  seems  not  improbable 
that  the  total  capitalisation  of  the  British  armaments 
business  may  be  fifty  millions  sterling  or  more.  The  amount 
of  new  naval  construction  alone  which  was  given  to  private 
contractors  last  year  amounted  to  more  than  twelve  million 
pounds  sterling. 

The  first  thing  to  note,  then,  is  the  vast  size  and  wealth 
of  these  concerns  which  flourish  upon  the  nation's  suffering, 
and  suffer  when  the  national  burden  is  lightened.  Most  of 
them  have  done  prodigiously  well  in  recent  years,  especially 
since  the  anti-German  scare  of  1899.  The  Vickers  and 
Armstrong  firms  alone  have  distributed  about  a  million-and- 
a-half  sterling  in  profits  this  year,  and  are  increasing  their 
capital  by  about  2f  millions.  Let  me  give  some  illustrative 
details.  The  shareholders  of  Armstrong,  Whitworth,  and 
Co.,  had  this  year,  as  the  Times  said,  an  "  agreeable 
surprise,"  in  the  shape  of  "  a  12^  per  cent,  dividend  on  the 
Ordinary,  with  a  bonus  of  one  share  for  every  four  previously 
held,  which,  at  the  current  value  of  the  shares  is  practically 
equal  to  14s.  per  share.  .  .  .  This  conversion  of  undivided 
profits  into  new  capital  shows  that  the  directors  take  a 
confident  view  of  the  near  future.  .  .  .  For  the  years  of 
the  present  century,  the  dividend  has  never  fallen  below 
10  per  cent.,  and  on  five  or  six  occasions  it  has  been  as  high 
as  15  per  cent. ;  and  this  comes  after  deducting 
nearly  £90,000  for  Debenture  interest  (not  including 
the  stock  held  by  the  Company  itself)  and  £40,000 
for  Preference  dividend."  These  profits  do  not  trench  on 
a  special  reserve  of  £459,000;  and  they  are  in  spite  oh 
the  large  outlay  in  moving  the  principal  works 
from  Elswick  to  Walker-on-Tyne.  Beside  its  British 
contracts,   the  company  has  had  on  hand  during  the  past 


jear  a  battleship  for  Turkey,  another  for  Brazil,  and  another 
for  Chili,  the  last  two  being  "larger  and  more  powerful  " 
than  any  British  vessel  built  by  the  firm.t  It  is  now,  or  has 
lately  been,  building  also  for  Japan  and  Argentina.  It  is  said 
that  the  company  "  supports  120,000  men,  women,  and 
children  by  the  Newcastle-on-Tyne  works  alone — that  is, 
about  a  third  of  the  whole  population."* 

At  the  annual  meeting  of  Vickers,  Ltd.,  on  March  28, 
1913,  Mr.  Albert  Vickers,  the  Chairman,  was  also  able  to 
congratulate  the  shareholders  on  "a  successful  year"  at 
their  Sheffield,  Barrow,  Erith,  and  Birmingham  Works. 
In  1912  alone,  the  assets  of  the  company  increased  by  about 
£1,168,000.  A  dividend  of  10  per  cent,  on  the  ordinary 
shares  was  declared  (as  in  each  of  the  past  five  years),  and 
there  was  some  complaint  that  it  was  not  15  per  cent. 
It  was  also  decided  to  issue  £740,000  of  new  ordinary  shares. 
The  new  automatic  rifle-calibre  gun  of  this  firm  has  lately 
jeen  adopted  by  five  Governments. 

The  third  of  the  seven  great  firms,  Cammell,  Laird,  and 
Co.,  of  Sheffield  and  Birkenhead,  has  had  a  more  chequered 
'career,  partly  because  of  a  disastrous  difference  with  the 
Admiralty  and  War  Office  in  1907,  and  partly  because  a 
large  investment  in  the  Coventry  Ordnance  Works  did  not 
turn  out  well.  I  shall  refer  to  the  enlightening  history  of 
the  latter  adventure  presently.  In  the  four  years, 
1903-6,  Cammell,  Laird  made  net  profits  amounting  to 
£833,000.  Up  to  the  latter  year  they  had  distributed  for 
nine  years  dividends  on  the  ordinary  shares  averaging  over 
12  per  cent.  During  1907,  certain  mysterious  "  irregu- 
larities," of  which  no  definite  information  was  given,  were 
discovered  at  the  Sheffield  Works,  and  the  Company  were 
struck  off  the  lists  of  Army  and  Navy  contractors.  In  order 
to  secure  reinstatement,  the  chairman  and  two  managing 
directors  resigned,  and  Government  work  was  then  recovered. 
This  episode  cost  the  Company  a  loss  of  £169,000  in  1907 
and  1908;  and  while,  in  the  four  subsequent  years,  profits 
have  been  made  to  the  amount  of  £535,000,  this  has  not 
permitted  the  distribution  of  any  ordinary  dividends. 

Of  John  Brown  and  Co.,  which  is  now  engaged  in 
building  "the  most  powerful  battle  cruiser  in  the  world," 
appropriately  named  "  The  Tiger,"  the  Times  remarks  that 
"  to  have  paid  7|  per  cent,  for  five  successive  years,  in 
spite  of  labour  troubles  and  increased  working  costs,  is  no 
mean  achievement." 


t  statement  by  Sir  Andrew  Noble,  April  19,  1912. 
•  Times   Financial   Supplement,    March   29,   1913. 


II.— THE  SHARING  OF  £73,000,000. 

The  letter  of  Cammell,  Laird's  to  the  late  Lord  Tweed- 
mouth,  appealing  for  reinstatement  on  the  Admiralty  List, 
naturally  indicated  the  hardship  falling  upon  the  owners  of 
four  mi'Uions  of  share  and  debenture  capital,  and  upon  the 
15,000  men  employed  in  works  directly  owned  by  the  Com- 
pany. This  class  of  investment  is  not  commonly  held  in 
small  quantities  by  poor  people ;  it  is  naturally  a  property  of 
the  well-to-do  and  the  influential.  In  1909  the  Investors' 
Review  examined  the  share  lists  of  several  armaments 
companies,  and  it  found  in  that  of  Armstrong,  Whitworth 
alone  the  names  o'f  60  noblemen,  their  wives,  sons,  or 
daughters,  15  baronets,  20  knights,  8  M.P.s,  20  Military 
and  Naval  ofl&cers,  and  8  journalists.  Later  lists  show, 
among  other  things,  a  marked  connection  between  arma- 
ments' share-holding  and  active  membership  of  bodies  like 
the  Navy  League.  But  let  us  look  the  facts  in  the  face.  The 
influence  of  this  traffic  does  not  arise  merely  from  the 
wealth  of  its  directors  and  the  power  they  hold  in  Parliament, 
and  the  daily  Press.  Militarism  is  strong  in  England  because 
Lazarus  gets  some  poor  pickings  from  the  feast  of  Dives. 
We  do  not  always  realise  that,  while  we  have  by  far  the 
most  powerful  Navy,  the  British  Empire  has  also,  upon 
the  peace  establishment,  f'.e  largest  military  force  in  the 
world,  the  Russian  Army  alone  excepted.  It  now  falls  little 
short  of  a  million  men,*  and  when  compulsory  military 
service  is  fully  developed  in  Australasia,  it  will  considerably 
exceed  a  million.  Of  these,  725,000  are  Britishers,  600,000 
of  whom  are  located  at  home,  and  the  remainder  exiled 
mainly  in  tropical  or  sub-tropical  lands.  About  480,000  of 
them  are  liable  for  service  in  any  part  of  the  world  in  war 
time.  To  these  must  be  added  185,000  men  of  the  Fleet 
and  its  Reserves.  The  wages  of  the  Navy  and  Regular 
Army  amount  to  over  £16,000,000  a  year. 

Behind  this  foroe  of  910,000  able-bodied  and  middle-aged 
Britishers  of  the  two  "services,"  there  lie  two  bodies,  also  of 
adult  men,  mostly  skiUed  and  able-bodied,  of  whose 
numbers  we  have  no  exact  count: — (1)  Those  engaged  in 
the  arsenals  and  dockyards  and  in  the  works  and  factories 
of  the  armaments'  contractors,  and  (2)  Pensioners,  small 
and  large,  possibly  100,000  of  them,  since  their  cost  on  the 
Estimates  is  about  £2,500,000  a  year.       In  the  case  of  the 


•  In  Great  Britrtin  :  Re^nlars,  LSO.OOO ;  ATmy  Reserve  139,000 :  Special  Reserve, 
®,000;  Territorial  Force,  26S.000 ;  total,  600,000.  In  India:  British  Regulars. 
78,000 ;  Native  Troops.  165.000 ;  total,  243,000.  In  the  ColonUi  :  British  Regniars, 
47,000;  Colonial  MUitia  (rapidly  expanding  under  compulsion— eay)  100,000;  total, 
147,000.     Total  990,000. 

6 


Elswids  Works,  a  small  number  of  workmen  have  an 
interest  in  the  sale  of  arms  not  only  as  wage-earners,  but 
under  a  system  of  profit-sharing.  On  their  deposits,  a  fixed 
interest  of  4  per  cent,  is  paid,  plus  a  dividend  equal  to  half 
the  amount  by  which  the  ordinary  dividend  exceeds  4  per 
cent.,  but  so  that  the  total  does  not  exceed  10  per  cent. 
Thiis,  if  the  ordinary  share  dividend  be  10  per  cent.,  the 
workman  depositor  gets  4  per  cent,  plus  half  of  6  per  cent, 
equals  7  per  cent.  Of  16,000  employees  at  the  end  of  1911, 
only  2,788  came  within  this  scheme,  tieir  deposits  amount- 
ing to  £241,788. 

The  probability  is  that  1,500,000  adult  able-bodied  men — ■ 
which  is  equal  to  one  in  six  of  the  "  occupied  "  adult  males 
of  the  United  Kingdom — share  to  some  extent  in  the 
£73,000,000  a  year  which  "National  Defence"  now  costs 
us.  The  "share"  varies  greatly,  of  course.  The  Territorials 
give  in  labour  very  much  more  than  they  cost  in  money; 
they  are  only  included  for  the  sake  of  completeness.  As  to 
the  great  body  of  the  soldiers,  sailors,  and  armament  work- 
men, it  is  enough  to  say  that  they  are  nearly  all  compelled 
by  poverty,  and  that,  if  they  have  come  to  see  their  own 
interests  in  the  maintenance  of  this  particular  trade,  it  is 
not  so  much  their  fault  as  the  fault  of  society  at  large.  As 
a  vast  constituency  favourable  to  prodigal  expenditure  on 
armaments,  we  cannot  ignore  them,  although  they  get  none 
of  the  big  prizes  of  the  war  trade. 


III.— COMPANIES  AND  COMBINES. 

We  may  now  examine  more  closely  the  character  and 
methods  of  our  seven  chief  firms.  I  suppose  that,  if  asked, 
the  average  man  would  say  they  were  seven  independent 
busmesses,  competing,  in  a  patriotic  spirit,  for  the  patriotic 
work  the  Government  gives  them,  and  peculiarly  subject  to 
fluctuations  of  fortune  according  to  the  state  of  inter- 
national relations.  Yet  this  answer  would  be  far  wide  of  the 
truth.  They  were  once,  indeed,  independent  businesses; 
they  are  now  highly  syndicated,  and  compete  as  little  as 
possible.  If  they  are  patriots,  it  is  in  a  new  and  singularly 
impartial  kind — British  on  Monday,  Eussian  on  Tuesday, 
Canadian  on  Wednesday,  Italian  on  Thursday,  and  so  on, 
as  orders  may  be  got  from  China  to  Peru.  Finally,  as  we 
shall  see,  these  are  not  the  kind  of  men  to  wait  upon  the 
fortunes  of  political  parties ;  they  make  their  own  politics , 


they  make   their  fortunes  by   moulding  international  rela- 
tions to  their  own  will. 

Sir  Andi-ew  Noble,  Chairman  of  Armstrong,  Whitworth, 
and  Co.,  recently  spoke  in  public  of  the  "  keen  rivalry  "  of 
the  leading  firms ;  and,  no  doubt,  competition  continues 
within  a  considerable  field.  For  instance,  three  British 
groups  are  preparing  to  exploit  the  patriotic  sentiment  that 
is  now  being  so  assiduously  cultivated  in  Canada.  The 
first,  the  Canadian  Shipbuilding  Company,  is  a  subsidiary 
of  John  Brown  and  Co.,  with  a  capital  of  £2,000,000 
sterling,  and  works  at  Sydney,  Cape  Breton  Isle,  which  will 
soon  be  able  to  turn  out  the  largest  Dreadnoughts.  Secondly, 
Vickers  Ltd.  have  incorporated  a  Canadian  Company  at 
Montreal,  with  a  capital  of  a  million  sterling.  And  now  we 
learn  that  Sir  P.  Girouard  and  Sir  G.  H.  Murray  have  just 
returned  from  Montreal,  where  they  have  been  buying  for 
Messrs.  Armstrong  the  site  for  large  works  on  the  South 
shore  of  the  St.  Lawrence.  Again,  the  great  firms  are  pre- 
paring to  exploit  the  latest  victory  of  man  over  Nature, 
aerial  navigation,  for  the  purposes  of  warfare.  Messrs. 
Vickers  are  building  naval  airship  works  on  Walney  Island, 
Barrow,  where  a  thousand  or  more  men  will  presently  be 
employed.  Messrs.  Armstrong  are  also  entering  upon  the 
construction  of  military  aeroplanes  and  airships. 

Things  are  not  exactly  what  they  seem  in  this  sphere, 
and  we  do  not  know  to  what  extent  these  concerns  will  com- 
pete. But  the  Trust  tendencies  in  the  armaments  trade 
have  long  been  known  to  the  economic  student.  The 
process  differs  in  different  countries,  in  the  case  of  this  as  of 
other  manufactures.  In  England  it  has  taken  four  main 
forms — the  absorption  of  minor  in  major  companies ;  the 
creation  by  major  companies  of  minor  companies  in  strict 
tutelage  to  carry  out  special  kinds  of  work ;  the  amalgama- 
tion or  syndication  of  firms  in  associated  branches  of 
industry ;  and  the  formation  of  syndicates  which  do  not 
themselves  manufacture,  but  hold  the  shares  of  different 
companies,  and  so  effect  a  community  of  interests.  Some- 
times these  forms  are  mixed.  Thus,  in  1903,  Messrs  Cam- 
mell,  Laird  bought  the  Mulliner-Wigley  Company,  Ltd. 
Two  years  later,  Cammell,  Laird  came  to  an  agreement  with 
John  Brown  and  Co.  and  the  Fairfield  Shipbuilding  Co., 
by  which  the  subsidiary  business  was  rechristened  the 
Coventry  Ordnance  Co.,  a  half  of  the  capital  being  held  by 
Brown's,  and  a  quarter  each  by  Cammell  and  Fairfield.  The 
various  kinds  of  interconnection  which  I  have  named  are 
now  a  common  feature  in  annual  reports  and  shareholders' 
meetings.  At  this  year's  meeting  of  Vickers,  Ltd.,  the 
Chairman  said   that   "  the  subsidiary  and  connected  com- 

8 


panies  bad  brought  much  profitable  business  to  the  Vickers 
Company,  in  addition  to  the  satisfactory  profits  which  tbey 
contributed  as  tbe  result  of  their  own  direct  working.  That 
was,  perhaps,  especially  true  of  foreign  business." 

Tbe  tendency  towards  Trustification  was  well  known ;  it  is 
in  the  nature  of  ail  great  routine  businesses  of  our  day,  and 
the  only  surprising  thing  revealed  by  careful  search  is 
the  degree  to  which  tbe  process  has  gone.  Tbe  great  body 
of  tbe  War  Trade  is  now,  in  fact,  a  vast  financial  network, 
in  which  firms  apparently  independent  are  strengthened  by 
absorption,  and  linked  together  by  an  intricate  system  of 
joint  shareholding  and  common  directorships.  Thus, 
Vickers,  Ltd.  absorbed  the  Naval  Construction  Co.,  of 
Barrow,  the  Maxim-ISiordenfeidt  Co.,  and  the  Electrical 
and  Ordnance  Co.,  Ltd.  They  hold  half  the  share  capital 
of  Beardmores,  and  are  directorially  connected  with  Cam- 
mell,  Laird  and  Co.,  Whitehead  and  Co.  (torpedo  manu- 
facturers), the  Chilworth  Gunpowder  Co.,  the  Harvey 
Armour-Plate  Co.,  and  other  companies.  Armstrong, 
Whitworth,  and  Co.  absorbed  Mitchell's  Shipbuilding 
Works  at  Newcastle,  and  are  directorially  connected  with 
the  Whitehead  and  other  companies.  We  have  seen  the 
connection  of  John  Brown  and  Co.,  of  Sheffield  and  Clyde- 
bank, with  the  Coventry  Ordnance  Co. ;  they  also  hold  most 
of  the  shares  in  Thos.  Firth  and  Sons,  armour-plate  rollers, 
and  a  participating  interest  in  Harland  and  Woltf ;  they  own 
the  Clydebank  Engineering  and  Shipbuilding  Company, 
besides  various  mines  and  iron  works,  and  are  connected, 
through  directors  and  debenture  trustees,  with  Palmer's, 
Cammell,  Laird,  The  Projectile  Co.,  and  other  firms. 
Cammell,  Laird,  in  turn,  hold  half  the  shares  of  the  Fairfield 
Co.,  besides  a  quarter  of  those  of  the  Coventry  Co.,  and  are. 
connected  with  Vickers,  Ltd.,  and  other  firms.  Last  year's; 
balance-sheets  stated  the  interest  in  subsidiary  cox^-panies  to| 
ai-uount  to  over  four  millions  sterling  in  tiie  case  of  Vickers, 
and  two  millions  each  in  those  of  Armstrong's  and  Cammell, 
Laird's. 

In  spite  of  this  close  inter-connection  the  convention  of 

secrecy  "  is  maintained.      During  the  recent  meetings  of 

the  Institution  of  Naval  Architects  in  Glasgow,  the  principal 

works  were  practically  closed  to  the  visiting  experts,  on  the 

ground  that  Government  contracts  were  in  hand. 


IV.— COSMOPOLITANISM  IN  ARMS. 

The  most  remarkable  feature  of  this  syndicated  business 
is  its  foreign  development.     Very  rarely  a  company  moves 

9 


itself  bodily  over  the  frontier :  tiius,  the  French  Hotchkisa 
Company,  registered  m  1887,  took  over  last  yeaj 
the  business  of  tike  English  Hotchkiss  Company. 
But,  generally  8i)eaking,  the  British  flag  remains 
an  "  asset,"  as  wa«  said  on  a  famous  occasion. 
The  building  of  foreign  battleships  in  British  yards  would 
be  anomalous  enough,  if  Imperialist  patriotism  were  what 
it  pretends  to  be.  But  what  are  we  to  say  of  the  Continenteil 
yards  of  British  firms,  which  exist  only  to  defend  our 
foreign  "  rivals,"  and  do  not  even  yield  British  labour  its 
poor  solatium?  Looking  down  from  tiie  hillside  of  Pozzuoli 
over  the  Bay  of  Naples,  the  visitor  is  surprised  that  this 
lovely  coast  should  be  defaced  by  a  red-brick  pile  with 
towering  chimneys.  It  is  the  arsenal  of  the  British 
Armstrong-Pozzuc^  Company,  which  employs  four 
thousand  men,  and  is  the  ck.iei  naval  supply  source  of 
Germany's  second  ally.  ks  the  Ansaldo- Armstrong  Com- 
pany of  Genoa,  the  same  firm  has  built  two  Dreadnoughts 
and  several  cruisers  for  Italy,  and  has  built  minor  vessels  for 
Turkey.  Armstrong's  also  have  an  ordnance  and  sunaour- 
plate  works  in  Japan;  and  they  are  part  owners,  with 
Vickers  and  John  Brown  and  Co.,  of  the  "  Hispana  "  Naval 
Construction  establishment  at  Ferrol,  a  chief  instrument  of 
King  Alfonso's  ambitions  and  the  pauperisation  of  the 
Spanish  peasant.  Vickers,  Ltd.,  are  also  important  con- 
tributors to  the  Italian  Navy  through  the  subsidiary  com- 
panies, Vickers-Temi,  Ltd.,  Odero  of  Genoa,  £ind  Orlando 
of  Leghorn. 

One  of  the  most  extraordinary  episodes  of  recent  financial 
and  industrial  history  is  the  latest  rebuilding  of  the  Russian 
Navy,  in  which  British,  French,  German,  Belgian,  and* 
American  firms  have  been  and  are  new  co-operating  with 
the  Russian  Government — an  exhibition  of  internationalism 
as  striking,  in  its  way,  as  the  Peace  Conferences  at  the 
Hague,  which  the  same  Tsar  called  into  being  to  put  an 
end  to  the  race  of  armaments.  Fifty  million  pormds 
sterling  is  the  estimated  cost  of  this  new  fleet,  the  authori- 
sation for  which  was  extorted  from  the  Duma  a  year  ago. 
The  capital  is  mainly  found  by  French  and  other  foreign 
investors ;  the  interest  is  paid  by  poverty-stricken  Russian 
peasants  and  workmen.  Now,  it  is  to  be  noted  that 
patriotism  is  more  extreme  in  Russia  than  in  England — 
that  is  to  say,  it  is  ultra-Nationalist  and  ultra -Protectionist ; 
it  is  also  ultra-Clerical,  and  it  is  commonly  associated  wi'^ 
the  giving  and  taking  of  bribes,  but  that  is  another  story. 
The  Russian  Government  has  none  of  our  British  objections 
to  the  extension  of  State  business;  the  more  undertakings 
the    Gt)vemment   has   under   its   thumb,   the   more   oppor- 

10 


tunities  of  profit  are  there  for  the  ruling  bureaucracy. 
Therefore,  it  was  decided  that,  altiiough  foreign  money  and 
skill  must  be  enlisted,  they  should  be  made  as  far  as 
possible  to  serve  the  end  of  "  the  progressive  creation  of  a 
national  shipbuilding  industry."  So  Vickers,  Ltd.  (who 
have  just  got  the  contract)  are  not  to  supply  all  the  neces- 
sary guns,  but  to  build  a  new  gun  factory  under  forms 
of  a  special  company  with  a  capital  of  £1,500,000.  So, 
again,  ships  are  not  to  be  imported,  but  to  be  built  by 
Russian  labour,  with  Russian  material,  under  foreign 
guidance.  The  first  four  Russian  Dreadnoughts  are  now 
being  thus  completed,  in  St.  Petersburg,  under  the  super- 
vision of  John  Brown  and  Co.  At  Nikolaieff,  on  the  Black 
Sea,  two  other  battleships  are  being  built  by  a  Franco- 
Russian  company ;  while  another  is  being  built  in  a  yard 
partly  owned  by  Vickers,  Ltd.,  who  are  also  helping  to 
supply  the  machinery  of  two  of  the  Baltic  vessels.  Other 
machinery  rs  being  supplied  under  the  supervision  of 
Messrs.  Blohm  and  Voss,  of  Ha^mburg.  Russia  now  makes 
most  of  her  own  armour-plate,  but  orders  have  been  placed 
in  America  and  France.  In  ordnance,  the  foreigner  has  a 
greater  advantage,  and  Vickers  and  Armstrong  are  now 
anticipating  substantial  orders. 

The  Times  Engineering  Supplement  (June  25,  1913)  has 
a  significant  editorial  comment  on  these  facts.  In  the  old 
days,  the  masters  of  strategy  held  unmistakably  "  that  a 
nation  should  keep  its  counsel  and  its  materials  for  war 
alike  to  itself."  This  "established  principle  of  secrecy" 
has  been  abandoned,  and  "  the  present  interchange  of  ideas 
and  traffic  in  war  material  between  nations  is  a  remarkable 
product  of  modern  commerce  and  diplomacy."  It  is. 
"  regarded  with  complete  equanimity.  Yet  it  involves  what 
is  perhaps  the  most  momentous  paradox  of  the  age," 
namely,  that  material  equipment  of  navies  and  armies  may 
become  more  uniform,  but  superiority  "  will  rest  with  the 
nations  which  conaider  and  assist  the  development  of 
differences  from  established  types  " — a  conclusion  very 
comfortable  for  the  "War  Traders. 

Russia  is  potentially  a  wealthy  country.  At  the  other  end 
of  Europe  lies  the  small  and  poor  State  of  Portugal,  des- 
perately struggling  to  maintain  her  new  Republican  institu- 
tions. With  a  revenue  of  only  £16,000,000  a  year,  she 
has  a  debt  of  £180,000,000,  and  the  Budget  commonly 
fails  to  balance.  Yet  the  Government  of  Portugal  has  been 
persuaded  that  she  must  have  a  new  Navy,  and  that  only 
British  builders  can  save  her.  Accordingly,  a  "  Portuguese 
Naval  Construction  Syndicate,"  almost  wholly  British  in 
composition,  has  just  been  formed,   and  has  got  its   first 

11 


contract  of  £1,500/000.  It  comprises  the  firms  of  John 
Brown,  Cammell,  Laird,  the  Fairfield  Co.,  Palmer's 
Thorneycroft's,  and  the  Coventry  Ordnance  Co.* 
Time  was  when  Englishmen  bled  for  Portugal ;  now  our  old 
ally  must  bleed  for  us.  So  the  weak  pay  for  the  patronage 
of  the  strong. 

These  great  enterprises  raise  some  interesting  questions. 
From  time  to  time  there  is  a  mild  scare  about  England's 
position  ui  the  MediteiTanean ;  and  more  frequently  there 
is  a  demand  for  the  strengthening  of  the  land  and  sea 
defences  of  the  road  to  India.  Yet  the  only  danger  in  this 
direction  has  been  created  by  "patriotic".  British  capi- 
talists. Suppose  for  a  moment  that  the  war  these  patriots 
often  imagine — the  life  and  death  struggle  between  the 
Triple  Alliance  and  the  Triple  Entente — were  to  come  about. 
These  arsenals  and  dockyards  would,  of  course,  be  seized  and 
used  against  us.  Sir  Andrew  Noble  or  Mr.  Vickers  would, 
perhaps,  describe  this  as  an  absurd  supposition.  If  tnat  be 
so,  what  are  they  building  Itahan  Dreadnoughts  for?  If  not 
against  England,  then  against  whom?  Against  our  good 
friend,  France?  According  to  the  "  patriotic  "  theory,  that 
would  be  much  the  same  as  building  against  England.  Or 
against  Tui'key?  But  the  same  firms  show  their  impartiality 
even  by  using  their  Itahan  yards  to  supply  Turkey  with 
warships  she  cannot  use.  Or  against  Spain?  And  at  the 
same  time  they  are  providing  Spain  with  a  fleet  to  use,  on 
this  hypothesis,  against  the  fleet  they  have  built  for  Italy. 

Politically,  this  sounds  midsummer  madness;  as  a  busi- 
ness afl'air,  it  is  methodical  and  profitable  in  the  extreme. 
You  persuade  one  State — Italy,  for  instance — that  she  needs 
more  big  ships  or  a  new  field-gun.  The  next-door  neighbour 
— France,  for  instance — must  soon  follow  suit,  and  there 
will  be  more  orders.  Meanwhile,  another  neighbour — Spain, 
for  instance — is  easily  persuaded  that  her  African  interests 
are  in  danger,  and  that  the  British  Dreadnought  is  the  only 
type  of  insjrance  to  meet  the  case.  The  pressure  of  business 
wiU  now  be  transferred  from  Pozzuoh  to  Ferrol,  and  then 
round  again.  Or,  to  shift  the  scene,  you  find  it,  at  a  certain 
date,  quite  easy  to  persuade  the  Elder  Statesmen  of  Japan 
that  a  modem  Navy  is  necessary  to  their  designs  in  China 
and  Manchuria.  Are  you  not  the  authors  of  Britain's 
might,  and  is  not  this  the  "  Britain  of  the  Far  East  "?  All 
goes  as  you  have  foretold.  But  now  Russia's  humiliation 
offers  her  as  an  easy  prey  to  your  blandishments.  Millions 
have  a  way  of  disappearing  between  the  fingers  of  the 
Ministers  of  the  Tsar.       Tiiere  have  been  nxmierous  naval 


•The  Economitt,  May,  1912. 


scandals  in  St.  Petersburg,  in  which  foreign  agents  have 
sometimes  played  a  singular  part.  At  last,  however,  Kussia 
ii?  getting  her  Dreadnought  fleet,  and  Vickers  and  Brown  are 
getting  their  profits.  Let  Germany  look  to  her  Baltic  coast- 
line !  She  looks  to  it ;  and  there  is  good  business  for  Krupps, 
and  the,  Vulkan  Works,  and  the  Deutsche  Munitions-und- 
Waffen  Fabrik.  Now  the  Nobles  and  Mulliners,  the 
Robertses  and  Beresforda,  are  all  agog.  England  resounds 
with  the  anti-German  tocsin,  and  votes  of  censure  are  killed 
by  giving  new  contracts  to  Vickers,  Armstrong,  Brown,  and 
companies.  Parliament  and  the  Press  talk  of  a  political 
crisis :  all  that  has  really  happened  is  the  completion  of  a 
new  cycle  in  the  ceaseless  propaganda  of  the  war-traders. 
There  are  thousands  of  small  transactions  every  year  of 
which  these  large  transactions  may  be  taken  as  a  very 
advanced  type.  For  the  best  part  of  a  century,  England 
has  freely  spent  money  and  life — we  still  spend  many 
thousands  of  pounds  yearly — in  the  effort  to  suppress 
slave  raiders  and  slave  traders  in  Africa  and  Asia,  and  to 
repel  the  attacks  of  tribesmen  armed  no  longer  with  bows  and 
arrows,  but  with  modem  rifles  and  cartridges.  Where  do 
these  weapons  come  from?  ,r,Who  arms  the  hill-men  of  the 
Indian  frontier,  the  road  bandits  of  Persia  who  recently 
killed  certain  British  officers ;  who  arms  the  slavers  of  the 
Gulf,  and  the  Arabs  of  the  Tripolitaihe,  the  Somalis  and 
Abyssinians,  the  Albanians  and  Cretans,  the  Revolutionaries 
of  South  America,  and  the  innumerable  natives  of  inner 
Africa?  Birmingham  is  not  going  to  tell  us  the  secrets  of 
gun-running  on  the  coast  of  Morocco.  But  this  we  know — 
that  the  British  exports  of  fire-arms  and  ammunition  (not 
including  armour-plates  and  other  large  material)  amounted 
in  1911  to  £3,845,000,  and  that  this  "patriotic"  trade  is 
rapidly  growing.  We  may  be  sure  that,  in  this  instance 
also,  the  curse  of  militarism  comes  home  to  roost. 


v.— MORE   INTERNATIONAL  EXAMPLES. 

The  process  of  international  trustification  has  gone  further 
than  I  have  yet  indicated.  How  far  we  do  not  exactly  know. 
In  this,  as  in  other  departments  of  finance  and  manufacture, 
we  are  in  a  transition  stage  between  that  of  really  indepen- 
dent and  competitive  businesses,  and  of  the  all-embracing 
trusts  of  the  future.  The  appearance  of  competition  will  be 
maintained  as  long  as  possible,  because  it  is  essential  to  the 
"  patriotic  "  programme.     "  The  war  in  the  Balkans,"  says 

13 


the  Economist  (May  24,  1913),  "  has  been,  in  one  of  its 
aspects,  a  competition  between  Krupp  and  Creusot,  and  the 
groups  of  bankers  which  support  those  eminent  manufactur- 
ing concerns."  There  is  no  pretence  here  that  the  German 
firm  is  promoting  German  national  interests,  or  that  French 
pohcy  will  be  aided  by  the  success  of  Creusot  "^'It  is  on  both 
sides  a  mere  matter  of  trade.  But  if  Krupp  and  Creusot  are 
real  competitors,  a  little  of  the  old  illusion  is  still  left. 

In  the  business  of  loan-mongering,  which  is  the  lubricating 
agent  of  the  armaments  trade,  international  combination  is 
becoming  more  and  more  common  and  powerful-  The  case 
of  the  so-called  Quintuple  Loan  to  China  is  a  current  illustra- 
tion. Five  Powers  rally  their  financiers  and  organise  them 
into  a  "  pool  "  for  the  exploitation  of  the  young  Republic 
of  the  Far  East.  A  British  group  outside  this  ofl&cial  ring, 
led  by  the  London  and  South  Western  Bank,  attempts,  as 
the  Americans  would  say,  to  "  butt  in  "  by  offering  China 
what  seem  to  be  more  favoiirable  terms.  The  British 
Government  resists  it  with  all  its  force.  Meantime,  Aus- 
tria, which  is  not  one  of  the  five  Powers,  has  been 
"  jumping  the  claim."  On  April  10,  1913,  agreements  were 
signed  in  Pekin  for  two  six  per  cent,  loans,  the  one,  of 
£2,000,000,  in  the  name  of  an  Austrian  armaments  firm,  the 
Stabilimento  Tecnico  of  Trieste,  the  other,  of  £1,200,000, 
in  the  name  of  a  German  firm,  the  Vulcan  Works,  Stettin. 
The  two  loans  were  negotiated  as  one  transaction  through 
the  Austrian  Legation,  the  terms  being  that  about  £1,500,000 
should  be  paid  in  cash  in  45  days,  the  rest  to  be  retained  by 
the  negotiating  houses  pending  a  purchase  of  torpedo  boats.* 
What  on  earth  does  China  want  with  torpedo  boats, 
especially  at  the  moment  when  she  is  under  the  protection 
implied  in  the  Quintuple  Loan?  Well,  there  it  is;  and  it 
illustrates  well  the  present  mixture  of  competition  and  com- 
bination in  the  armaments  trade.  For  the  moment,  the 
money-lenders  have  rather  overdone  their  part.  Already 
pressed  by  the  costs  of  the  Balkan  War,  the  Paris  bankers 
are  called  upon  to  finance  the  Civil  War  in  Mexico.  "  The 
Stock  Exchange  has  been  staggered,"  says  the  Economist 
(May  24,  1913),  "  by  this  last  item  of  20  millions  sterling 
which  the  Mexican  Government  hopes  to  get,  at  a  usurious 
rate,  from  French  investors.  .  .  .  Can  we  wonder  that 
capital  is  becoming  scarcer  and  that  many  legitimate  and 
highly-productive  enterprises  aU  the  world  over  are  suffer- 
ing? " 

My  own  impression  is  that  a  wave  of  bad  trade  would 
expedite  the   process   of  trustification   among   the  world's 

*  Economist,  May  24,  1913,  citing  the  Pekin  Correspondent  of  the  Daily  Telegraph. 

14 


providers  of  war  tnatexial,  for  it  would  put  still  greater 
pressure  on  them  to  save  the  losses  of  competition.  In  his 
speech  in  ihe  Beichstag  on  April  18,  1913,  Herr  Liebknecht 
claimed  to  have  discovered  the  existence  of  an  international 
armaments  tnost  for  the  sale  of  repeating  rifles  in  Russia, 
China,  and  other  countries.  Tlie  component  firms  were  said 
to  be  combined  for  the  fixing  of  prices  in  common,  and  to  have 
a  general  committee  for  fixing  accounts,  for  propaganda 
through  common  agents,  for  technical  help  through  the 
exchange  of  drawings,  models,  and  so  on.  The  firms  named 
were  Austrian,  German,  and  Belgium.  Naturally,  this  did 
not  strike  the  German  public  as  did  the  case  of  the  Deutsche 
WaSens-und-Munitions  Fabrik,  a  company  holding  a  leading 
^lare  in  French  companies,  and  using  its  influence  in  the 
Paris  Press  to  stimulate  Franco- German  competition  in 
armaments.  An  analysis  of  the  directorships  and  aflfihationa 
of  the  Nobel  Dynamite  Trust  afiords  no  less  remarkable  an 
illustration  of  the  cosmopolitan  character  which  the  modem 
war-trade  is  assuming.  This  British  company,  with  its 
capital  of  £3,285,400,  its  net  profits  for  1911-12  of  £381,900, 
and  its  regular  10  per  cent,  dividends,  is  a  share-holding 
rather  than  a  manufacturing  concern.  It  is,  in  brief,  an 
Anglo-German  dynamite  aUiance.  It  holds  the  entire  share 
capital  of  the  Nobel  Explosives  Co.,  Ltd.,  has  seven  directors 
on  the  British  South  African  Explosives  Company,  and  is 
similarly  connected  with  the  Birmingham  Metal  and  Muni- 
tions Company,  the  Chilworth  Gunpowder  Company,  and  a 
number  of  other  British  firms.  On  the  other  side,  it  is 
interested  in  the  Dynamite  Action- Gesellsohaft,  formerly 
Alfred  Nobel  and  Co.,  of  Hamburg,  the  Dresdner  Dynamit 
Fabrik,  and  two  other  German  explosives  firms.  The  Trust 
itself  has  a  board  of  fourteen  directors,  of  whom  half  a 
dozen  are  Germans;  while  one  of  the  subsidiary  companies, 
the  British  South  African,  has  four  Germans  and  one 
Frenchman  on  its  board. 

An  even  more  extraordinary  combination  of  British, 
German,  French,  Italian,  and  American  firms  has  been  in 
existence  for  the  past  decade — the  Harvey  United  Steel 
Company.  Although  a  dividend  of  7^  per  cent,  had  been 
paid  in  1911,  it  was  decided  last  year  to  wind  the  concern 
up — why,  does  not  appear.  It  was  registered  in  1901  to 
amalgamate  or  control  several  companies  holding  the  rights 
of  the  Harvey  armour-plate  patents.  Other  firms  apparently 
came  in  afterwards.  The  managing  director  was  Mr.  Albert 
Vickers,  chairman  of  Vickers,  Ltd.,  with  a  holding  of  2,697 
shares.  Other  directors  were  Mr.  Beardmore,  of  Wm. 
Beardmore  and  Co. ;  Mr.  J.  M.  Falkner,  of  Armstrong, 
Whitworth;    and  Mr.  C.  E.  Ellis,  with  a  holding  of  7,438 

15 


sliares,  representing  John  Brown  and  Co.,  the  Coventry 
Co.,  and  Thos.  Firth  and  Co.  The  chief  American  partner 
was  the  Bethlehem  Steel  Co.,  holding  4,301  shares.  The 
chief  French  partner  was  the  Schneider  Company  with  9,862 
shares.  The  combine  had  four  French  directors,  two  of 
whom  held  2,000  shares  each.  This  did  not  in  any  way 
prevent  the  collaboration  of  the  two  German  armaments 
firms  condemned  in  the  Reichstag  by  Herr  Liebkneckt,  the 
Essen  Company,  holding  4,731  shares  and  having  two 
representatives  on  the  Board,  the  Diilingen  Company  having 
one  representative  and  holding  2,731  shares.  Finally,  the 
Italian  Terni  Steel  Company  held  8,000  shares.  Behind 
the  manufacturers  stood  the  bankers,  the  same  extra- 
ordinary ainity  prevailing.  The  house  of  Ernest  Ruffer, 
with  6,169  shares,  linked  hands  with  the  Boug^res  Freres, 
of  Paris  (3,000j,  on  the  o'ne  side,  and  the  Deutsche  Bank  of 
Berlin  (1,350)  on  the  other.  In  forty  years  all  the  Peace 
Societies  have  not  succeeded  in  effecting  such  a  Franco- 
German  reconciliation  as  this.  In  the  share-list,  Mr. 
Newbold  found  the  names  of  one  British  General  and  two 
Major  Generals ;  and  "behind  these  were  the  shadowy 
figures  of  a  vast  host  of  Princes,  Peers,  Ministers  of  the 
Crown,  soldiers,  sailors,  and  clerics."  A  veritable  Brother- 
hood in  Arms.  I  cannot  believe  that  the  Harvey  United  Steel 
Company  is  reo'.ly  dead.  Somewhere  it  has  surely  had  a 
glorious  resurr  jction ;  under  some  metamorphosis,  it  surely 
lives  and  works  to  prove  the  pettiness  of  national  prejudice, 
and  the  ease  of  forgetting  such  sores  as  Alsace-Lorraine, 
when  mcu  have  learned  the  golden  wisdom  of  "good 
business." 


VI.— A  "  PRIVATE  AMBASSADOR  "  AT  WORK. 

This  information  we  owe  to  the  mild  rules  of  publicity 
imposed  upon  public  companies  in  this  country.  Of  the 
inner  working  of  the  armament  firms  in  general,  and  the 
international  combines  in  particular,  we  know  very  little ; 
but  on  several  occasions  the  curtain  has  been  lifted  for  a 
moment,  with  the  most  enlightening  results.  I  will  give 
some  brief  illustrations  of  how  their  agents  scout  for  orders, 
of  how  their  managers  find  their  two  great  kinds  of 
opportunity — an  international  crisis,  and  a  great  "  scrap  ' 
of  war  material — and  of  how  they  command  the  service  of 
Governments,  Liberal  and  Conservative  alike.  Let  us  take 
the  lesser  agents  first. 

16 


On  December  14  and  15,  1904,  one  Roberfe  Lawrie 
Thompson,  formerly  a  special  con-espondent  of  the  Times, 
took  action  in  the  Chancery  Division,  before  Mr.  Justice 
Warrington,  against  Sir  W.  G.  Armstrong,  Whitworth,  and 
Co.,  Ltd.,  claiming  an  account  and  payment  of  commission 
and  other  sums  alleged  to  be  due  from  the  firm  or  its 
predecessors,  Armstrong,  Mitchell,  and  Co.,  with  regard  to 
orders  for  warships  and  other  war  material  from  the 
Governments  of  Chile,  China,  and  Japan,  during  the  years 
1892-S.  -aThe  case  is  only  briefly  reported ;  but  the  following 
details  are  given  in  the  Tunes.  After  Mr.  Danckwerts,  K.C., 
had  outlined  the.  plaintiff's  case,  Mr.  Rufus  Isaacs,  K.C., 
fcr  the  defendants,  said  he  was  glad  to  be  able  to  inform 
the  Court  that  the  parties  had  arranged  terms  of  compromise 
which  it  was  not  necessary  to  state  publicly.  Proceedings 
were  accordingly  stayed,  and  who  will  doubt  the  wisdom 
of  the  great  Armstrong  firm?  But,  as  the  following  state- 
naent  was  published  without  contradiction,  its  substantial 
truth  may  be  taken  as  admitted,  particularly  as  a  former 
member  of  the  staff  of  the  Times  was  concerned. 

"  It  appeared,"  says  the  report,  "  that  the  plaintiff,  from 
his  previous  avocation,  knew  a  great  many  things  that  were 
going  on  in  various  parts  of  the  world,  and  was  personally 
acquainted  with  many  foreign  personages  and  officials  in 
high  position.  His  engagement  with  the  defendant  firm 
was  not  that  of  an  ordinary  commission  agent ;  his  business 
was  to  find  out  what  was  happening  in  various  foreign 
countries,  to  let  his  employers  know  what  was  likely  to  be 
required,  and  generally  to  prepare  the  ground  for  orders  for 
warships  and  war  material.  His  position,  in  fact,  was  some- 
what analogous,  "said  counsel,  "to  that  of  a  private  diplomatic 
agent  or  ambassador."  This  is  credible  enough.  All  foreign 
correspondents  of  leading  journals  have  peculiar  sources  of 
information ;  many  of  them  have  considerable  influence  in 
the  countries  where  they  reside.  It  is  the  pride  of  the  Times 
to  maintain  something  as  nearly  as  possible  approaching  the 
status  of  a  diplomatic  service.  De  Blowitz  in  Paris  and 
Dr.  Morrison  in  Pekin  are  only  two  of  the  notable  names 
in  this  hierarchy;  and  do  we  not  know  that  Mr.  Bourchier, 
the  special  correspondent  of  Printing  House  Square  in  the 
Balkans,  was  one  of  the  authors  of  the  Balkan  Alliance?" 

From  1886  to  1897,  then,  Mr.  Robert  Lawrie  Thompson 
was  "  private  diplomatic  agent  or  ambassador  "  for  the 
Armstrong  Company ;  and  up  to  September,  1894,  he  was 
also  special  correspondent  of  the  Times,  ceasing  to  act  in 
the  latter  capacity  "  owing  to  a  diti'erence  of  opinion  on  the 
political  situation  in  the  East."  His  first  field  of  operations, 
in  1886,  was  Spain  and  Portugal;  but  "  this  did  not  turn 

17 


out  a  very  profitable  business."  It  was  a  very  different 
world  in  1886;  the  first  modem  navy  scare — that  of  ]\Ir. 
Stead  and  Lord  Charles  Beresford — -had  only  just  set  going 
the  great  ocean  race.  Who  knows?  It  may  be  the  bread 
Mr.  Robert  Lawrie  Thompson  then  cast  upon  the  waters 
that  is  now  returning  in  fat  contracts  to  the  Brown- 
Cammell  and  Armstrong- Vickers- Brown  •combines.  In 
1890  Mr.  Thompson  began  to  represent  the  firm  in  Argentina 
and  Chile,  "in  which  latter  country,"  said  counsel,  "he 
had  special  advantages  for  obtaining  orders."  What  the 
"special  advantages"  were,  we  are  not  told;  but,  appar- 
ently, the  result  was  satisfactory,  for  in  August,  1892,  this 
remarkable  commission  arrangement  was  arrived  at  with 
regard  to  operations  by  the  "  private  ambassador  "  both  in 
South  America  and  in  further  Asia:  "2^  per  cent, 
commission  on  the  cost  of  hulls  and  engines  of  orders  for 
war  vessels  for  Chile ;  5  per  cent,  an  orders  for  other  war 
materials ;  1  per  cent,  on  the  hulls  and  engines  and  all  war 
material  ordered  by  China  and  Japan  during  plaintiff's 
residence  there  and  for  one  year  afterwards;  £1,000  towards 
expenses."  Mr.  Thomps<Hi  went  to  China  in  1893.  In 
February,  1894,  he  had  a  difference  with  Sir  Andrew  Noble; 
and  six  months'  notice  was  given  to  terminate  the  contract. 
The  misunderstanding  was  cleared  up,  however ;  and  the 
arrangement  went  on.  In  March,  1895,  Mr.  Thompson 
returned  to  England;  and  soon  afterwards  a  subsidiary 
agreement  was  made  by  which,  in  addition  to  the  one  per 
cent,  commission,  he  was  to  receive  £3,000  a  year  for 
expenses  for  a  period  of  a  year  and  a  half  from  the  following 
August.  He  did,  in  fact,  remain  in  the  East  for  that  period 
— till  May,  1897;  and  it  was  in  regard  to  sums  outstanding 
under  these  agreements  that  he  took  action  against  the 
Armstrong  Company.  How  much  Mr.  Thompson  claimed, 
or  how  much  Armstrong's  paid,  we  do  not  know.  It  will  be 
seen  that  there  was  to  be  at  least  £5,500  for  expenses  alone ; 
as  the  arrangement  lasted  so  long,  it  is  probable  that  the 
other  payments  were  substantial. 

What  is  it  in  this  story  that  shocks  the  mind  of  the 
ordinary  peaceful  citizen?  Evidently  businesses  of  the 
magnitude  of  those  with  which  we  are  dealing  must  have 
their  agents  and  travellers,  open  and  secret.  What  vaguely 
moves  our  disgust  is,  perhaps,  just  this,  that  it  should  be 
necessary  for  a  certain  class  of  British  manufacturers,  for 
whom  a  peculiar  degree  of  patriotism  has  been  claimed,  to 
maintain  abroad  a  service  of  scouts  whose  profit  depends  on 
their  power  of  inveigling  smaller  foreign  nations  ("  half- 
devil  and  half-child,"  as  tixe  bard  of  empire  called  theml, 
into   the   deadly  feuds   and   the   abominable   waste   of  the 

18 


"Great  Powers."  We  know  in  our  hearts  that,  m  the 
case  of  these  small  States,  the  conventional  arguments  have 
none  of  the  plausibility  they  have  in  England,  France,  or 
Germany.  If  Portugal  is  in  danger,  two  or  three  battle- 
ships cannot  save  her.  China  no  more  needs  torpedo  craft 
than  Canada  needs  Dreadnoughts  The  only  reality  on 
which  such  a  trade  can  be  based  is  the  readiness  for  violence 
which  seems  to  exist  in  and  between  certain  South 
American  States.  Civil  war  or  international  war,  no  matter 
— the  agent  of  some  British  Trust  stands  at  the  elbow  of 
the  rival  freebooters,  and  his  trade  depends  upon  their 
savagery.  We  are  parties  to  solemn  treaties  closing  large 
parts  of  the  earth  to  the  traffic  in  arms.  We  keep  gunboats 
here  and  there  to  repress  this  illegal  traffic.  At  the  same 
time,  arsenals  and  dockyards  inseparably  bound  up  with 
the  British  State  are  carrying  on  a  larger  traffic  essentially 
of  the  same  character.  All  over  the  world  the  name  of 
England  is  being  thus  damned,  in  the  eyes  of  the  peoples 
and  posterity,  as  the  supreme  exemplar  in  the  arts  of  homi- 
cide. The  iniquity  of  dumping  opium  upon  a  reluctant 
China  has  at  last  been  most  practically  recognised.  When 
shall  we  see  that  the  trade  in  big  guns  and  high  explosives 
is  equally  a  trade  in  poison? 


VII.— IS  IT  COERUPT? 

Whether  in  a  more  limited  sense  it  is  a  corrupt  trade  is 
a  question  we  can  hardly  overlook  at  the  present  moment, 
but  it  is  altogether  a  subordinate  question.  During  his  visit 
to  South  America  in  1911,  M.  Clemenceau  declared  that 
French  guns  were  beaten  by  German  guns  in  Argentina,  not 
because  of  their  superior  make,  but  by  the  more  liberal 
bribes  given  by  German  agents.  I  have  listened  in  Con- 
stantinople and  St.  Petersburg  to  astonishing  tales,  and 
travellers  familiar  with  Portugal  and  Spain,  Italy,  and 
China  could  probably  cap  them.  In  some  of  these  countries 
bribery  is  the  rule  rather  than  the  exception.  That, 
happily,  cannot  be  said  of  England.  But  corrupt  practices 
are  still  so  prevalent  as  to  have  led  recently  to  the  estab- 
lishment, under  the  presidency  of  Sir  Edward  Fry,  of  a 
"  Secret  Commissions  and  Bribery  Prevention  League,"  the 
purpose  of  which  is  to  secure  the  full  administration  and 
the   strengthening    of   the    Prevention    of    Corruption    Act, 

19 


1906.*  It  appears  that  the  War  Office  has  expressed  its 
sympathy  with  the  work  of  the  League,  and  the  Admiralty 
has  shown  its  zeal  by  forbidding  the  sale  in  canteens  of  any 
kinds  of  goods  with  which  prize  coupons  are  given  away  I 
The  League  has  had  before  it  cases  of  "  alleged  bribery  of  or 
by  .  .  .  army  agents  .  .  .  canteen  managers  .  .  .  company 
secretaries  .  .  .  Government  officials' .  .  manufacturing 
engineers  .  .  .  metal  merchants,  military  contractors,  and 
naval  contractors."  Although  the  secrecy  maintained  by 
the  Admiralty  and  War  Office  with  regard  to  their  lists  of 
contractors  is  calculated  to  give  an  unfavourable  impression, 
I  know  of  no  evidence  that  the  armaments  trade  is  more 
liable  than  any  other  to  the  petty  forms  of  this  evil. 
As  I  have  said,  we  do  not  know  what  were  the  "  irregu- 
larities "  which  crippled  Cammell,  Laird  and  Go.  in  1907; 
but  the  punishment  was  a  heavy  one.  And,  in  a  higher 
sphere,  the  Netheravon  case,!  like  the  Marconi  case,  sug- 
gests that,  at  least  whenever  Party  interests  can  ue  served, 
a  dubious  transaction  is  likely,  sooner  or  later,  to  attract 
public  notice.  Sensational  as  these  incidents  may  prove, 
their  importance  is  small  in  comparison  with  the  normal 
and  accepted  conditions  of  the  trade  in  arms.  The  tongue 
of  scandal  wags  if  a  Minister  sells  a  piece  of  land  to  the 
Government  in  which  he  holds  a  place,  or  buys  a  piece  of 
land  from  a  fellow  Minister  or  a  Parliamentary  supporter. 
But  the  purchase  of  warships,  guns,  ammunition,  and  other 
supplies  from  companies  in  which  friends,  relatives,  and 
supporters  of  Ministers  are  managers,  directors,  or  share- 
holders is  part  and  parcel  of  the  British  governing  system. 
Powerful  associations,  many  of  whose  members  are  share- 
holders, exist  to  foster,  if  not  the  trade  directly,  the  par- 
ticular superstition  on  which  this  trade  thrives.  It  is, 
apparently,  quite  in  order  for  a  director  of  one  of  these  com- 
panies to  demand,  from  his  place  in  the  House  of  Commons, 
greater  expenditure,  some  of  which  will  go  into  the  pockets 
of  his  firm.  It  is  not  simply  in  order,  it  is  proof  positive 
of  patriotism,  that  the  leaders  of  a  great  Party  should  set 
themselves  to  create  a  cloud  of  panic  that  will  presently 
burst  in  a  blessed  rain  of  dividends  among  their  followers. 


•  In  commending  the  work  of  the  League,  the  txineii  spoke  of  this  evil  as  "  a 
canker  that  has  eaten  deeply  into  the  commercial  integrity  of  which  this  cou«>try 
is  justly  proud."  See  "  The  War  Against  Bribery,"  by  the  Hon.  Secretary, 
Mr.  R.  M.  Leonard.  The  League's  Offices  are  at  8  and  9,  Queen  Street  Place, 
London,  E.G. 

t  In  1899,  Sir  Michael  Hicks-Beach's  Netheravon  estate,  on  Salisbury  Plain, 
was  purchased  by  the  War  Office,  with  the  assent  of  the  Treasury.  Sir  Michael 
was  at  the  time  Chancellor  of  the  Exchequer,  and  therefore  left  the  management 
of  the  matter  to  Mr.  Balfour  iind  Mr.  Goschen.  The  net  rental  of  the  7,817  acres 
was  £2,629,  and  thirty-flve  years'  purchase  was  given.  The  valuation  for  death 
duties  was  £43,0.37,  the  actual  purchase  price  £93,411. 


20 


It  is  to  this  class  of  fact,  rather  than  to  any  possibility  of  the 
pettier  kind  of  corruption,  that  I  wish  to  draw  the  reader's 
notice. 


VIII.— "  MOST  VALUABLE  ASSISTANCE." 

Is  it,  perhaps,  as  a  guarantee  of  purity  of  administration 
and  perfect  integrity  that  the  boards  of  the  companies 
and  combines  are  packed  with  representatives  of  what,  for 
brevity,  I  may  call  the  governing  and  decorated  classes? 
Take  Armstrong,  Whitworth's,  for  instance.  The  Chair- 
man, Sir  Andrew  Noble,  is  a  Baronet  and  Knight  Commander 
of  the  Bath,  Commander  of  the  Order  of  Jesus  Christ 
of  Portugal,  Knight  of  the  Order  of  Charles  III.  of  Spain. 
Grand  Cross  of  the  Crown  of  Italy,  First  Class  of  the  Sacred 
Treasure  of  Japan,  and  he  also  caiTies  Turkish,  Chinese, 
and  Brazilian  honours  thick  upon  him.  Need  I  add  that 
this  Cosmopolitan  "  patriot  "  is  a  Conservative  and  a  Tariff 
Eeformer?  To  balance  matters  a  little,  the  Vice-Chairman 
is  the  Right  Hon.  Lord  Rendel,  formerly  friend  and  host  of 
"William  Ewart  Gladstone,  and  father-in-law  of  Henry  Neville 
Gladstone,  who  is  also  a  member  of  the  Armstrong  Board. 
Other  directors  are  Sir  G.  H.  Murray,  G.C.B.,  P.O.,  I.S.O., 
who  was  private  secretary  successively  to  W.  E.  Gladstone 
and  Lord  Rosebery,  and  was  Permanent  Secretary  of  the 
Treasury  from  1902  to  1011  ;  Col.  Sir  Percy  Girnvard, 
R.E.,  K.C.M.G.,  D.S.O.,  who  was  Governor  of  Northern 
Nigeria  till  1909,  and  Governor  and  Commander-in-Chief  of 
British  East  Africa  thence  till  last  year;  Rear-Admiral 
Sir  Charles  Ottley,  K.C.M.G..  M.V.O.,  formerly  British 
Naval  Attach^  in  the  United  States,  Japan,  Italy,  Russia, 
and  France,  Naval  Assistant  Secretary  of  the  Defence  Com- 
mittee in  1904,  from  1905  to  1907  Director  of  Naval  Intelli- 
gence, and  thereafter  Secretary  of  the  supreme  war-board 
of  the  Empire,  the  Committee  of  Imperial  Defence.  At  the 
last  annual  meeting  of  the  Company,  Sir  Andrew  Noble 
spoke  gratefully  of  the  "  most  valuable  assistance  "  of  these 
gentlemen;  and,  indeed,  "  most  valuable  "  it  must  be,  for 
there  could  hardly  be  found  three  men  carr;\'ing  with  them  a 
completer  knowledge  of  the  inner  working  of  the  British 
Government,  to  say  nothing  of  their  ]iersonal  influence  and 
capacity.  Among  the  trustees  for  the  debenture  holders  of 
Armstrong's  stand  Earl  Grey,  formerly  Governor  General  of 
Canada,  and  the  Hon.  Alfred  Lyttelton,  K.C.,  formerly 
Colonial  Secretary,  and  an  active  member  of  the  Front 
Opposition  Bench. 

The  other  companies  approach  as  near  as  they  can  to  this 

21 


remarkable  achievement.  Lord  Aberconway,  a  prominent 
Liberal  peer,  is  chairman  of  John  Brown  and  Co.,  which 
includes  on  its  board  two  distinguished  officers,  Lieut. -Col. 
G.  S.  Davies  and  Captain  Tressider,  C.M.G.  Lieut.  Sir  A. 
Trevor  Dawson,  formerly  of  Woolwich,  ie  one  of  the  managing 
directors  of  Vickers,  Ltd.,  of  which  Sir  Vincent  Caillard,  the 
distinguished  financier  who  has  so  often  been  engaged  in 
special  political  duties  for  the  British  Government,  is  also 
a  dh:ector.  The  Hon.  H.  D.  Maclaren,  M.P.,  Lord  Aber- 
conway's  eldest  son,  is  a  director  of  Palmer's.  Lord  Pirrie, 
chairman  of  Harland  and  Wolff,  is  also  a  debenture  trustee 
of  John  Brown  and  Co.,  of  Thomas  Firth  and  Co.,  and  of 
the  Coventry  Ordnance  Co,  Lord  Eibblesdale  is  a  director 
of  the  Nobel  Dynamite  Trust.  Sir  A.  T.  Hadfield,  another 
Liberal,  is  chairman  of  the  Hadfield  Foundry  Co.,  Ltd.  Lord 
Balfour  of  Burleigh  is  a  debenture  trustee  of  the  Coventry 
Co.,  and  of  Beardmore's,  of  which  the  Marquess  of  Graham 
is  a  director.  Mr.  S.  Roberts,  M.P.,  is  a  director  of  Cammell, 
Laird,  and  Co.  Admiral  Lord  Charles  Beresford,  K.C.B., 
M.P.,  is  chairman  of  Henry  Andrew  and  Co.,  manufacturers 
of  steel  for  armaments.  Admiral  Sir  G.  Digby  Morant, 
K.C.B.,  formerly  superintendent  of  Pembroke  and  Chatham 
dockyards,  is  a  director  of  the  Fairfield  Co.  Admiral  Sir 
Cyprian  Bridge,  G.C.B.,  formerly  Director  of  Naval 
Intelligence,  is  a  debenture  trustee  of  Thomey croft's. 
Admiral  Sir  Archibald  Douglas,  G.C.V.O.,  formerly  a  Lord 
of  the  Admiralty,  is  a  director  of  Hadfield  and  Co.,  Palmer's, 
and  Richardson,  Westgarth's.  General  Brackenbury,  C.B., 
K.C.B.,  G.C.B.,  K.C.S.I.,  formerly  Director  of  Military 
Intelligence,  and  Director  of  Ordnance  at  the  War  Office,  is 
director  of  the  Hadfield  Foundry  Co.  Lord  Sandhurst, 
G.C.I.E.,  twice  Under-Se-cretary  of  War,  is,  or  was,  a  deben- 
ture trustee  of  Vickers.  Major-General  S.  Nicholson,  C.B., 
formerly  Assistant-Director  of  Artillery  at  the  War  Office, 
and  Colonel-Commandant  of  the  Royal  Artillery,  is  chairman 
of  the  board  of  the  Guncotton  Powder  Co.,  Ltd.,  where  his 
past  experience  should  surely  prove  "  most  valuable." 
Major-General  Micklem,  R.E.,  is  a  director  of  the  King's 
Norton  Metal  Co.  The  Hon.  H.  C.  L.  Holden,  C.B., 
formerly  head  of  the  Royal  Gun  and  Carriage  Factories  at 
Woolwich,  retired  from  the  Royal  Artillery  this  year,  is  a 
director  of  the  Birmingham  Small  Arms  Co.,  Ltd.,  of  which 
Sir  H.  Rogers,  ex-Mayor  of  Birmingham,  is  chairman.  And 
so  on.  It  is  not  suggested,  of  course,  that  the  debenture 
trustees  named  have  directorial  powers;  but  their  position 
as  financial  watchdogs  is  significant. 

The  tradition  of  a  passage  to  and  fro  between  high  Govern- 
ment posts  and  the  direction  of  the  contracting  companies 

22 


has  ansen  gradually,  though  its  recent  extension  has  been 
rapid.  In  1863,  the  first  great  naodem  warship  designer, 
Sir  Edward  Reed,  was  called  from  private  work  to  be  head 
of  the  construction  department  of  the  Admiralty.  After 
"  opening  a  new  epoch  "  there,  and  giving  the  world  many 
interesting  examples,  he  retired  in  1870,  and  joined  Sir  J. 
Whitworth  in  his  ordnance  works.  Afterwards,  he  became 
chairman  of  E-arle's  shipbuilding  works  at  Hull,  and  directed 
the  construction  of  warships  for  a  number  of  foreign  Powers. 
Sir  W.  H.  White,  having  been  in  the  construction  depart- 
ment of  the  Admiralty  from  1867  to  1883,  then  undertook 
the  organisation  and  direction  of  the  warship  building 
department  of  Armstrong  and  Co.  In  1885,  after  the  Stead- 
Beresford  scare,  he  returned  to  the  Admiralty  as  Chief 
Constructor,  remaining  till  1902,  when  he  received  a  special 
grant  of  money  from  Parliament  in  recognition  of  his 
services.  His  successor  was  Sir  Philip  Watts,  who  had  been 
baval  architect  and  director  of  the  warship  building  depart- 
ment of  Armstrong's  from  1885  to  1901. 

What  do  these  facts  imply?  Firstly,  that  these  im- 
mensely-wealthy artd  powerful  companies  and  combines  are 
entrenched  firrrily,  perhaps  irremovably,  in  the  governing 
class  of  Great  Britain  and  its  dependencies.  Their  forty  or 
fi-fty  or  sixty  millions  of  capital  largely  belong  to  this  class, 
many  members  of  which  would  be  gravely  injured  by  any 
arrest  of  the  competition  in  armaments ;  and  millions  of 
yearly  dividends,  beside  salaries,  directors'  fees,  and  trustees' 
honoraria  are  distributed  largely  within  this  class,  creating, 
consciously  or  unconsciously,  in  it  the  permanent  temper  of 
militarism  in  which  our  "  service  "  Estimates  are  conceived 
and  carried. 

Secondly,  that  they  command  the  kind  of  skill  and  special 
knowledge  which  is  popularly  supposed,  and  surely  ought, 
to  be  the  exclusive  property  of  the  Government.  Upon 
that  kind  of  skill  and  special  knowledge  the  safety  of  thei 
kingdom  and  the  empire  is  supposed  to  depend ;  yet  we  see 
it  being  offered  like  any  common  commodity  to,  and  bought 
by,  companies  increasingly  cosmopolitan  in  character,  com- 
panies constantly  buildi-ng  for  foreign  purchasers,  building  in 
foreign  yards,  partners  with  German,  French,  Italian,  and 
other  manufacturers.  Much  of  this  special  knowledge  was 
once  secret  information,  obtained  in  the  very  highest  and 
most  strictly-guarded  recesses  of  the  Government  service. 
All  the  Members  of  Parliament  at  Westminster  cannot 
persuade  Sir  Edward  Grey  to  subject  his  department  to  the 
gaze  of  a  responsible  Foreign  Affairs  Committee ;  but  Secre- 
taries of  the  Treasury,  Colonial  Governors,  dockyard  superin- 
tendents. Directors  of  Naval  and  Military  Intelligence,  high 


Army  and  Navy  officers,  and  even  Secretaries  of  that  sanctum 
sancioru-nt ,  the  Imperial  Defence  Committee,  are  perfectly 
free  to  carry  the  experience  they  have  thus  confidentially 
gained  at  the  cost  of  the  State  into  the  service  of  an 
abominable  private  trade.  That  seems  to  me  a  scandal 
beside  which  the  Marconi  affair  and  other  affairs  of  the  kind 
pale  into  insignificance. 


IX.— ECONOMICS  OF  A  NAVAL  "  SCEAP." 

The  fact  is — and  this  is  the  upshot  of  the  whole  matter — 
the  British  Government,  perhaps  the  strongest  in  the  modem 
world,  is  powerless  before  the  monstrous  array  of  interests 
which  I  have  superficially  examined.  I  said  that  its  two 
great  opportunities  lay  in  the  "  scrap  "  and  the  "  scare." 
We  have  become  so  much  accustomed  to  the  "  scrapping  " 
of  machinery  in  productive  industry  that  what  is  politely 
called  "  the  progress  of  invention  "  is  accepted  as  inevitable 
in  the  trade  of  armaments  also.  Few  men  stop  to  think  of 
the  essential  difference  between  a  new  and  ultimately 
cheaper  process  of  spinning  cotton,  or  building  high  struc- 
tures, or  refining  metal,  or  transporting  corn,  and  a  new  and 
for  ever  more  expensive  type  of  warship,  cannon,  rifle,  or 
ammunition.  In  the  former  case,  the  ordinary  course  of 
commercial  competition  secures  a  real  gain,  in  which  the 
public  has  some  share ;  the  inventor  fails  unless  he  can  give 
a  better  or  a  cheaper  result  than  that  already  existing.  Even 
in  the  world  of  luxury,  a  relatively  limited  sphere,  there  is 
usually  something  of  beauty  or  amenity  to  compensate  for 
much  waste.  The  business  of  armaments  alone  is  pure 
waste,  and  pure  waste  upon  an  ever-extending  scale. 

Why  ever  extending?  One  answer  to  this  question  is 
that,  although  it  is  the  chief  concern  of  Governments,  the 
provision  of  armaments  is  not  a  Government  monopoly,  but, 
for  the  most  part,  a  private  trade.  As  such,  it  has  these 
great  advantages  over  other  trades  in  the  exploitation  of 
inventions — the  cost  is  practically  immaterial,  since  there  is 
a  national  purse  to  dip  into;  there  is  no  question  of  securing, 
as  every  other  invention  must,  a  cheaper  or  more  publicly 
profitable  commodity;  and  there  is  no  visible  end  to  the 
process  of  "  scrapping."  All  you  have  to  do  is  to  invent  a 
more  deadly  weapon,  and  then  play  upon  the  fears,  real  cr 
assumed,  of  every  Government  for  every  other  Government. 
"  Humanity?  "  Rubbish,  my  dear  sir,  this  is  the  Trade  of 
Death,  and  no  nonsense  about  it.     "  Patriotism?  "     Read 

24 


the  life  of  Eobert  Whitehead,  the  inventor  of  the  modem 
torpedo,  and  consider  other  instances  I  have  set  forth.  Con- 
sider the  stake :  we  are  not  dealing  here  with  paltry 
thousands,  but  with  millions  and  scores  of  millions. 

Even  a  sketch  of  recent  "  scraps  "  and  scares  would 
require  a  substantial  volume.  There  are  two  central  points 
of  interest — 1884  and  1905.  The  former  is  the  year  of  the 
Navy  panic  created  by  W.  T.  Stead,  Arnold  Forster,  and 
Admiral  Lord  Charles  Beresford.  It  led  to  a  whole  series 
of  great  shipbuilding  programmes,  and  greatly  stimulated  the 
Imperialist  reaction  culminating  in  the  South  African  war. 
Every  new  step  of  successive  First  Lords — Lord  George 
Hamilton,  Lord  Goschen,  Lord  Spencer,  Lord  Selbome, 
Lord  Cawdor,  Lord  Tweedmouth — was  going  to  be  the  last. 
Goschen  was  the  great  plunger :  in  five  years  he  brought  up 
the  naval  charges  from  £19,500,000  to  £31,500,000  a  year. 
During  one  debate  he  pooh-poohed  Lord  Charles  Beresford 
as  an  "  irresponsible  person."  The  caustic  reply  was  that 
"  the  Government  has  done  everything,  or  nearly  everything, 
that  I  have  wanted  them  to  do  for  years  past. "  Lord  Charles 
added  a  distinctly  naughty  story  of  a  certain  First  Lord  who 
declared  one  day  that  "if  he  had  a  couple  of  millions  for 
the  Navy  he  would  not  know  what  to  do  with  it,  but  shortly 
afterwards  came  down  to  the  House  and  said  that  if  he  did 
not  have  six  millions  we  should  lose  the  Empire."  So  far, 
we  had  been,  ostensibly,  building  against  France  and  Russia. 
In  1904,  Lord  Selborne  brought  the  Navy  Estimates  up  to 
£87,000,000,  though  the  Russian  fleet  had  been  destroyed 
and  the  Anglo-French  Agreement  concluded. 

Then  came  Admiral  Sir  John  Fisher's  great  "scrap," 
the  philosophy  of  which  is  explained  in  an  appendix  to  the 
Estimates  of  1904-5.  A  new  and  shorter  estimate  of  the 
effective  life  of  warships  was  adopted  which  condemned 
most  of  the  vessels  recently  built  as  worthless.  In  twenty 
years,  we  had  spent  about  £450,000.000  in  the  vain  effort 
to  establish  a  maritime  despotism.  In  five  years,  the  cost 
of  the  Navy  had  doubled  ;  in  twenty  years,  it  had  quadrupled. 
We  had  not  fought  a  single  considerable  naval  battle  in  that 
period;  yet  the  greater  part  of  a  sum  which  would  have 
sufficed  to  establish  old-age  pensions  and  industrial 
insurance  in  perpetuity  without  further  charge  was  now 
represented  only  by  scrap-iron.  The  whole  classes  of 
"  protected  "  and  "  unprotected  "  cruisers  were  condemned 
as  practically  useless,  except  for  "  police  "  purposes,  a 
verdict  affecting  115  vessels,  which  had  cost  between 
£35,000,000  and  £40,000,000.  Of  these,  34  vessels  were 
only  five  years  old.  The  38  cruisers  of  Lord  George 
Hamilton's  1890  programme,  and  all  of  the  same  type  for 

25 


which  Ix)rd  Goschen  and  Lord  Selborno  were  afterwards 
responsible,  were  dismissed  to  the  scrap-heap. 

You  may  suppose  that  such  a  lesson  as  this  could  not 
Boon  or  easily  be  forgotten.  If  so,  you  do  not  realise  what 
it  is  to  live  under  a  tradition  that  we  must  give  everything 
the  Admiralty  and  its  contractors  ask  for.  The  mass  of 
toilers,  who  do  not  read  Parliamentary  reports  or  State 
papers,  never  heard  of  Lord  Fisher's  great  "  scrap,"  or 
never  understood  it.  The  "governing  classes  "  understand 
it — otherwise.  For  them  it  was  really  the  preparation  for 
a  new  start,  a  Spring  cleaning  of  the  Whitehall  Casino  in 
readiness  for  a  new  gambling  season.  The  sacrifice  of  old 
ships  should  have  resulted  in  a  large  economy.  The 
memorandum  announcing  it  stated  that  £4,500,000  a  year 
would  suffice  for  their  replacement.  Yet  the  next  vote  for 
new  building  was  £11,500,000. 

Next  there  appeared  the  new  portent,  the  Dreadnought, 
laid  down  on  October  2,  1905,  and  out  at  sea  a  year  later. 
In  whose  brain  this  colossal  slaughter-machine  was 
Conceived,  we  do  not  know;  we  only  know  that  it  was  a 
British  brain — no  foreign  enemy  jealous  of  our  power  or 
possession  put  this  threat  upon  us — and  that  many 
millions  have  been  paid  to  private  traders  to  duplicate  and 
still  further  improve  it.  At  a  stroke,  the  competition  of 
navies,  of  which  we  bear  the  heaviest  cost,  was,  by  our 
action,  lifted  to  a  yet  higher  and  costlier  plane.  The  United 
States  followed  suit  in  1906,  Germany  in  1907.  Pre- 
Dreadnought  types  now  scarcely  counted.  Large  classes  of 
ironclads  and  cruisers  recently  built  were  again  rendered  prac- 
tically obsolete.  A  few  months  before,  most  of  them  had  been 
officially  given  an  effective  life  of  from  15  to  22  years.  What 
this  new  scrap-heap  represents  in  cash — otherwise,  in  lost 
labour — it  is  hardly  possible  to  say,  perhaps  £70,000,000  or 
£80,000,000.  The  sequel  is  fresh  in  all  our  memories. 
Dreadnoughts  have  developed  into  Super-Dreadnoughts. 
The  original  of  the  type  had  a  displacement  of  17,000  tons; 
they  are  now  building  to  29,000  tons,  and  the  cost  is  in 
proportion.  Thirty  of  these  monsters  have  been  or  are 
being  built,  at  a  cost  of  seventy  or  eighty  millions  sterling. 
Now,  the  aeroplane  and  airship  threaten  to  revolutionise 
warfare  ;  and  experts  are  talking  of  an  altogether  new  type 
of  warship,  driven  by  gas  or  oil  fuel,  with  internal  com- 
bustion engines,  which  will  abolish  the  existing  type  of 
vessel. 

Such  is  the  punishment  to  which  science  dooms  human 
folly.  Invention  and  large-scale  production  govern  the 
making  of  the  machinery  of  manslaughter  as  well  as  oi 
useful  commodities.     But  with  what  a  different  result !     It 

26 


is  an  automatic  multiplication  of  evil.  Every  step  in  the 
increase  of  armaments  is  bad  in  itself,  but  it  is  worse  in 
leading  to  a  new  stage  of  still  greater  waste  and  provocation. 
Yet  all  the  forces  of  Gk>vernmental  power  and  trading 
interest  go  to  stimulate  the  process.  What  a  satire  it  is  on 
our  claim  to  be  an  enlightened  people  that  the  only  great 
manufacturing  business  the  direction  of  which  we  entrust 
to  the  State  is  the  one  which  is  a  perfect  embodiment  of 
the  worst  human  passions,  and  the  most  elaborate  system 
of  organised  waste  ever  conceived  by  the  wit  of  man ! 


X.— HISTOEY  OF  A  GREAT  SCARE. 

"  We  have  been  hasty  in  the  scrapping  of  cruisers,"  says 
the  Navcd  Annual  for  1912.  But  what  would  you?  The 
War  Traders  must  live ;  the  Government  has  allowed  a  vast 
interest  to  grow  up  of  which  it  is  no  longer  master.  The 
theory  of  the  matter  we  take  to  be  that  the  State  arsenals 
and  dockyards  are  kept  up  only  sufficiently  (1)  to  afford  a 
means  of  floating  new  types  and  testing  contract  prices  and 
qualities,  and  (2)  to  permit  of  the  necessary  expansion  in 
time  of  war.  We  really  depend  upon  Armstrong's,  Vickers, 
and  the  rest.  I  have  said  that  many  of  these  firms  carry 
on  other  branches  of  manufacture.  They  have  laid  down 
enormous  plants ;  they  are  continually  engaging  more 
capital,  establishing  new  factories,  enlarging  their  lists  cf 
workmen.  They  have  every  reason,  even  in  prosperous 
times,  for  attempting  to  cajole  or  coerce  the  Government 
to  give  them  new  orders.  We  have  seen  something  of  the 
political  influence  they  can  command ;  and  we  have  the 
evidence  of  Sir  Robert  Chalmers  before  the  Estimates 
Committee  of  1912  that  Treasury  control,  always  limited, 
"  in  the  case  of  the  Army  and  Navy  is  very  small  indeed  as 
regards  material  and  contracts  generally — contracts  for  the 
building  of  ships,  the  purchase  of  guns."*  But  imagine  the 
position  of  these  companies  when  trade  is  depressed,  or 
when,  for  any  reason,  they  are  individually  suffering  a  slack 
time.  We  may  be  sure  that  every  nerve  is  then  strained 
to  obtain  Government  work;  and,  if  the  easiest  and  most 
effective  argument  is  an  appeal  to  international  jealousy 
and  fear,  are  we  not  properly  punished  for  our  credulity? 
To  give  the  devil  his  due,  the  system  in  which  Patriotism 

•  Pp.  277,  Question  30.— Asked  whether  the  Treasury  had  any  expert  means  of 
checkinp  the  cost  of  Army  and  Navy  contracts.  Sir  Robert  Chambers  replied: 
"  None  whatever."  The  Admiralty  itself  "  have  practically  the  wliole  control." 
— Questions  73  and  89. 

27 


is  the  means  and  Profft  the  end  is  much  older  than  the 
present  generation  of  armament  contractors.  They  have 
but  bettered  an  ancient  tradition,  one  that  will  last  as  long 
as  the  servility  of  the  people.  The  offence  which  led  to  the 
downfall  of  Mr.  H.  H.  Mulliner  was  not  that  he  raised  a 
baseless  s«are,  but  that,  his  success  having  benefited  other 
companies  rather  than  his  own,  he  overstepped  all  discretion 
in  his  complaints. 

Briefly,  this  is  the  story  :  In  1905,  Mr.  Balfour's  Govern- 
ment was  in  power,  and  the  prospect  for  the  armaments 
trade,  under  the  new  conditions  introduced  by  Lord 
Fisher's  great  "  scrap,"  was  of  the  best.  In  June,  the 
Coventry  Ordnance  Company  wa^  established,  in  the  manner 
already  described;  and,  in  the  following  month,  speaking 
at  the  annual  meeting  of  the  chief  parent  firm,  John  Brown 
and  Co.,  Sir  Charles  Maclaren  was  reported  as  "  expressing 
pleasure  that  Sir  John  Fisher  was  determined  to  go  on 
building  battleships,  because  that  was  certain  to  bring  more 
work  to  their  company."  In  December,  however,  Mr. 
Balfour  resigned;  and  in  January,  1906,  the  Campbell- 
Bannerman  Gx)vernment  was  confirmed  in  its  place  by  the 
most  emphatic  verdict  recorded  in  any  modern  General 
Election.  The  very  completeness  of  the  rout  may  have 
suggested  to  the  energetic  and  resourceful  mind  of  Mr. 
H.  H.  Mulliner,  managing  director  of  the  Coventry  Ordnance 
Company,  the  need  of  a  campaign  independent  of  the  dis- 
credited Tariffists. 

The  "  Diary  of  the  Great  Surrender,"  which  Mr.  Mulliner 
himself  afterwards  published  {Times,  Jan.  3,  1910)  con- 
tains these  two  entries,  which  practically  cover  the  period 
of  the  campaign:  — 

"  May  13,  1906,  Mr.  Mulliner  first  informs  Admiralty  of 
preparations  for  enormously  increasing  the  German 
Navy.  (This  information  was  concealed  from  the 
nation  until  March,  1909)." 

"  March   3,    1909,   Mr.   Mulliner,   giving   evidence   before 
the  Cabinet,   proves  that  the  enormous  acceleration 
in  Germany  for  producing  armaments,  about  which 
he   had   perpetually   warned   the   Admiralty,    wa?!   an 
accomplished  fact,  and  that  large  quantities  of  naval 
guns    and   mountings   were   being   made   with    great 
rapidity  in  that  country." 
For  three  years,    in   fact,   Mr.   Mulliner  gave  himself  to 
the  work  of  propagating  the  myth  of  a  gigantic  expansion 
of  Krupp's  works,   in  particular,   and  German  acceleration 
in  general.      It  was  an  underground   campaign   (the   indis- 
cretion came  afterwards) ;  but  we  gather  from  thp  subsequent 

28 


Tetters  and  speeches*  that  Mr.   MuUiner's  "  information," 
Bent  first  to  the  War  Office  in  May,  1900,  was  "  passed  on 
to  the  Admiralty,"  "  was  discussed  by  them  with  several 
outsiders,"  and  then  "  passed  from  hand  to  hand  so  that 
hundreds  have  read  it."     Of   this   "information,"   1  need 
Qow  say  nothing  more  than  that,  as  soon  as  it  became  public, 
it  was  emphatically  contradicted  by  Messrs.  Krupp,  through 
Mr.  John  Leyland,  M.P.,   and  other  correspondents,   that, 
after  some  years  it  was  practically  admitted  by  the  Govern- 
ment to  be  false,   and  that  time  has  proved  that  it  never 
had  any  real  basis.     It  was,  nevertheless,  propagated  with  ( 
unremitting  zeal,  in  forms  more  and  more  lurid,  and  with  I 
the  gradual  assent  of  the  leaders  of  the  Opposition.     But  ( 
plans  and  proposals  made  by  the  Coventry  Works  to  the  \ 
Admiralty  were  apparently  rejected  in  1907  and  1908. 

In  April,  1908,  Sir  Henry  Campbell-Bannerman  was 
succeeded  by  Mr.  Asquith,  and  the  Ministry  was  recon- 
structed, with  Mr.  McKenna  at  the  Admiralty.  The  new 
pombination  was  far  from  being  suspected  of  "  Little  , 
Pnglandism  "  or  a  slavish  regard  for  peace  and  economy; 
but  it  was  considered  to  have  great  personal  strength. 

In  the  following  autumn,  Mr.  Blatchford  opened  his 
incendiary  campaign  in  the  Daily  Mail.  At  the  same  time,  in 
November,  1908,  Mr.  Mulliner,  according  to  his  own  account 
of  the  matter,  "was  fortunate  in  obtaining  a  hearing  from 
one  of  our  greatest  generals  " — presumably  Lord  Roberts, 
who,  in  the  House  of  Lords  on  November  23,  prophesied 
"  a  terrible  awakening  in  store  for  us  at  no  distant  date." 
Mr.  Mulliner  attributes  to  this  powerful  aid  the  subsequent 
surrender  of  the  Government  to  the  scare-mongers. 

We  have  now  reached  the  crisis  of  March,  1909.  On  the 
3rd  of  that  month  occurred  the  extraordinary  incident  of 
Mr.  MuUiner's  solemn  reception  by  the  supreme  governing 
body  of  the  Empire,  the  Cabinet  in  Council  assembled  at 
Downing  Street.  Ten  days  later,  the  statement  explanatory 
of  the  Navy  Estimates  was  published.  It  showed  a  total 
of  £35,142.700  for  1909-10,  an  increase  of  £2,823,200,  new 
construction  accounting  for  an  increase  of  £1,340,000.  This 
was  to  allow  for  the  building  of  four  Dreadnoughts  and  other 
ships;  and  the  Government  asked  for  power  to  build  four 
other  Dreadnoughts  contingently  on  its  fears  of  German 
acceleration  being  justified.  The  Estimates  themselves,  the 
discussion  of  them  on  March  16  and  subsequent  days,  the 
attitude  of  the  Opposition  leaders,  and  the  after-action  of 
the  Government,  all  bear  strong  marks  of  the  secret  cam- 

•  MuUiner's  owa  communications  (Times,  August  2  and  16,  September  21, 
December  14  and  17,  1909;  January  1,  3,  6,  7,  8,  12,  15,  and  18,  1910);  a  speech  at 
Bedford  (Times,  December  20,  1909)  Mr.  M'Kenna  (Times,  January  7  and  March 
17,  1910) ;  Mr.  Duke,  K.C.,  M.P.,  and  other  speakers  in  the  Estimates  discussion  on 
March  16,  1910. 

29 


paign  ot  untrue  intormation  on  which  Mr.  Mulliner  and  his 
friends  had  been  engaged  for  three  years.  Mr.  Balfour  per- 
formed prodigious  feats  of  imaginative  calculation  as  to 
Germany's  future  Dreadnoughts.  The  Government  had 
foretold  17  for  March,  1912.  Admiral  von  Tirpitz  told  the 
Budget  Committee  of  the  Reichstag  (on  March  17)  that 
there  would  be  only  13  in  the  Autumn  of  1912.  Mr.  Balfour 
declared  they  would  have  25,  or,  in  any  case,  21,  in  March, 
1912.  This  "  danger  point  "  being  long  past,  we  can  now 
test  the  various  prophets  by  accomplished  fact.  Admiral 
Tirpitz  has  been  fully  justified  by  time:  Germany  had,  in 
fact,  only  nine  Dreadnought  battleships  and  cruisers  on 
March  31,  1912,  and  only  14  on  March  31,  1913.  The  British 
Government  calculated  17  for  March,  1912;  this  number 
is  now  expected  to  be  reached  in  March,   1914!*     As  for 

Mr.  Balfour's  estimate  of  21  or  25 ! 

But  we  anticipate.  However  incredible  it  may  now  seem, 
in  March,  1909,  the  untrue  information  first  floated  by  Mr. 
Mulliner,  of  the  hitherto-unfortunate  Coventry  Ordnance 
Works,  purveyed  by  him  to  the  aforesaid  famous  general, 
to  Mr.  Balfour,  Lord  Cawdor,  Mr.  Lee,  and  a  number  of 
other  M.P.s,  including  Mr.  Sam  Roberts,  of  Sheffield,  his 
"  former  co-director  "  in  Cammell,  Laird's,  and  above  all, 
to  the  Cabinet  itself ;  then  purveyed  by  all  these  gentlemen, 
in  various  degrees  and  forms,  to  Parliament  and  the  Press — 
this  information  swept  the  country  off  its  feet.  Croydon  was 
carried  triumphantly  on  the  cry:  "  We  want  eight,  and  we 
won't  wait."  Mr.  Balfour's  vote  of  censure  was  rejected; 
but  Ministers  had  accepted  the  grave  (as  the  event  proved, 
the  shameful)  charges  against  the  German  Government,  and, 
as  the  "Annual  Register"  says,  "All  but  the  extreme 
economists  were  silenced."  On  July  26,  Mr.  McKenna 
announced  that  the  four  "  contingent  "  Dreadnoughts  would 
be  laid  down  forthwith. 

One  of  the  first  new  contracts  was  given  to  Cammell, 
Laird,  and  at  a  meeting  of  the  Company,  in  which  Mr. 
Roberts,  M.P.,  took  part,  "  there  were,"  according  to  the 
Times,  "  many  expressions  of  sympathy  with  the  directors, 
and  admiration  for  their  work."  But  what  of  Mr.  Mul- 
liner's  own  concern,  the  Coventry  Ordnance  Works?  It 
was  constantly  in  evidence  during  the  scare,  chiefly  by  heck- 
ling questions  in  the  House  as  to  whether  it  was  receiving 
orders,  and,  if  not,  why  not.  Apparently  it  was  still  not 
favoured  by  the  Admiralty.    As  time  went  on,  and  the  public 

•  "  Naval  Annual,  1912,"  p.  81,  where  the  following  figures  are  given : — 

Britain.        Germany. 
March    31,    1912     ....        18        ....  9 

„     1913    ....        28        ....        1* 
„     1914     ....        34        ....        17 

30 


agitation  subsided,  Mr.  Mulliner's  soul  burned  within  him. 
But  the  appetite  of  the  Jingo  Press  was,  for  the  moment, 
sated.  The  Times  told  him  plainly  (January  5,  1910)  that 
his  "  diary,"  directed  against  the  Government,  was  "  some- 
what less  than  just,  and  not  a  little  misleading."  But  the 
unpardonable,  the  fatal  thing  for  Mr.  Muiliner  was  his  avowal 
of  the  authorship  of  the  scare,  and,  in  particular,  of  his  visit 
to  Downing  Street  ^Ministers  may  have  to  bow  to  a  storm 
originated  by  the  armament  traders ;  but  they  could  never 
consent  to  have  the  true  history  of  such  an  episode  pubi>>cly 
advertised.  Mr.  Muiliner  was  politely  warned  oS.  He  had 
vindicated  his  right  to  a  niche  in  otir  political  history,  at  the 
cost  of  his  post.  He  retired  with  compensation,  and  was 
succeeded  as  managing  director  by  a  man  of  greater  dis- 
cretion. Kear-Admiral  E.  H.  S.  Bacon,  C.V.O.,  D.S.O., 
approached  these  matters  with  a  complete  knowledge  of 
oflQcial  traditions,  for  after  being  first  Captain  of  the  Dread- 
nought, he  was  Naval  Assistant  to  the  First  Sea  Lord,  and 
from  1907  to  1909,  Director  of  Naval  Ordnance  and 
Torpedoes.  Under  him,  the  Ck)ventry  Company  has 
received  heavy  Government  orders  and  has  increased  its 
capital  from  a  £1,000,000  to  £1,400,000.*  From  which,  we 
may  see  that  a  successful  agitator  must  sometimes  be  con- 
tent to  k^ep  his  mouth  shut,  and  that  there  is  more  than  one 
reason  why  high  officials  go  into  this  particular  ta:ade. 


XI.— CONCLUSION. 

To  sum  up :  The  great  bulk  of  the  so-called  defence 
expenditure  of  the  British  Empire  goes  into  the  hands  of 
private  profit  makecs.  It  is  an  immensely  large  and  lucra- 
tive trade.  It  consists  of  companies  and  oombines,  the 
strongest  of  which  are  closely  allied,  and  compete  less  and 
less.  It  is  essentially,  and  is  becoming  more  and  more,  a 
cosmopolitan  trade;  its  owners'  nationalist  pretentions  are, 
therefore,  rank  humbug.  It  employs  the  usual  touting  arts 
of  commerce;  but  it  also  manufactures  two  special  kinds  of 
opportunity : — (1)  The  flotation  of  new  types  of  arms,  which 
result  in  enormous  "  scrapping"  of  existing  material;  and 
(2)  The  international  scare,  of  which  the  Muiliner  "  crisis  " 

•At  the  annaal  B»««ting  of  Jofaa  Browm  aad  Co.,  on  Jnlj  1,  1913,  Lord 
Aberconway  said  :  "  Coventry  was  improving,  bnt  it  was  a  great  drag  on  their 
finances,  and  wou4d  be  for  some  time.  Tbe  plAoe  was  now  fnHy  recognised  by 
the  Goverarnent  as  an  essential  part  of  the  natkmal  armament  workis.  Last 
aotumn  he  went  over  the  Scotson  works,  where  they  made  the  heavy  naval 
mountings,  with  Mr.  Winston  Ctwrchfll.  who  gave  him  an  assorance — wtiich  be 
had  carried  out — that  Corentry  would  now  be  regarded  slb  one  of  the  roost 
important  supplying  firms  for  toe  GovemmeDt,  instead  of  t^lng  coid-sfaoaldered, 
as  it  was  for  mani'  years  past." — (.Tinea  report.) 


31 

J^21680 


m  1909  is  a  type.  It  is  these  two  processes  which' 
mainly  account  for  the  ruinous  level  of  our  present  national 
expenditure.  In  the  person  of  retired  military,  naval,  and 
civil  servants  of  the  highest  rank  whom  it  employs,  the 
trade  possesses  secret  information  supposed  to  be  available 
to  the  heads  of  the  G-overnment  alone.  And  it  is  so  firmly 
entrenched  in  the  governing  class  of  the  country  that  no 
Ministry  has  yet  dared  to  make  a  serious  effort  to  dislodge  it. 

Such  is  the  modern  trade  of  arms ;  and  I  will  add  only  one 
word  about  it.  If  British  Democracy  does  not  soon  find  a 
way  of  destroying  this  Hydra,  it  will  destroy  Bri^-ish 
Denjocracy. 


Tlie  Haiioaal  Labosr  Prees,  Ltd.,  Manchester  and  Loaien. 

32 


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